Just what is Google up to?

First Google poaches a top flight executive to head up their move into health. Next they announce per a post on FireceBioTech;

“DeepMind, Alphabet’s U.K.-based artificial intelligence company, announced in a blog post that the team responsible for its Streams app and medical research projects will be joining the tech giant. Google first acquired DeepMind in 2014, before restructuring into its parent company, Alphabet, and transferring its subsidiaries.”

Already the company is partnered with Dexcom and Sanofi as they make their deep dive into the diabetes pool. It’s their partnership with Sanofi which seems to be in trouble. Just as a reminder Sanofi has a dubious history when it comes to diabetes partnerships. Their attempt to enter the BGM market with AgaMatrix was a dismal failure as was their ill-fated attempt to work with Medtronic.

Yet OnDuo, their partnership with Google, could well turn out to be the company’s Waterloo. Not like anyone needs to be reminded but when it comes to diabetes things aren’t going to well for our Chardonnay drinking friends. Lantus has gone from the goose that lays the golden eggs to an ugly duckling. Toujeo the replacement for Lantus hasn’t filled the void and Balsaglar from Lilly is eating them for lunch.

Amdelog, their biosimilar short-acting insulin which should do to Humalog and NovoLog what Balsaglar did to Lantus is going nowhere in a hurry. Honestly we think that Sanofi is the only company in diabetes that would screw up a winning lottery ticket.

Their GLP-1 franchise is not much of a franchise, more like another disaster, and their pipeline is not much of a pipeline. The bottom line is they NEED OnDuo to produce or risk sinking completely into the diabetes abyss. They have invested $250 million and to date have seen no return on this investment. So don’t be surprised if the rumors we’ve been hearing that the company wants to buy out Google and go it alone materialize into fact.

The reality is Google has nothing to prove and while they would like OnDuo to succeed they do not need OnDuo to succeed. When you have gobs of cash and tons of talent its an understatement to say the company has plenty of options and could easily replace Sanofi. The slap it on turn it CGM they have with Dexcom could be a blockbuster product that forever changes how all patients with diabetes manage their diabetes. Their Pixel phone will control the pump Lilly is working on if it ever makes it to market and both Lilly or Novo Nordisk would be foolish not to answer should Google come calling.

This leaves Sanofi in a conundrum do they continue to wait patiently for OnDuo to bear fruit, do they risk yet another embarrassment with another failed diabetes partnership (oh and we forgot to mention the MannKind partnership didn’t work out well either) or do they pay off Google, takeover and make a last stand in diabetes. We suppose there is another option as they could pull a JNJ and exit diabetes entirely selling the franchise.

Based on history our gut tells us our friends in Paris cannot risk another embarrassment and they are too provincial to admit they can’t hit water if they fell out of an ocean liner. What they are very good at is throwing money around and while the buyout will cost them this by their way of thinking is the most acceptable of a bad set of choices.

Since the demise of Lantus, and even before that, diabetes has been a series of disasters yet as much as they should let go they just can’t. Sanofi like so many in this space cannot admit defeat or worse they failed. Better to pony up a few hundred million, try to make a go of it and then quietly kill the project when it becomes obvious it’s not going to work.

On the flip here and this plays into what Sanofi does, is what exactly will Google do next in diabetes. Will they be content with the Dexcom partnership or will they make an even deeper dive? The agreement with Lilly to have the Pixel control the Lilly pump would indicate a deeper dive. However if they really wanted to be in the pump business they could have bought Tandem back when the company was on deaths doorstep. Perhaps they will develop a Tyler as a strategy to sell more slap it on turn it on sensors and an area where Novo and Lilly are also going.

Frankly no one really knows what Google is thinking and quiet honestly we don’t think they know yet. When you are making gobs of money, have gobs of money and don’t need new ventures to make an instant impact on the bottom line this is understandable. Which is another reason why Sanofi likely will buy them out as Google has no sense of urgency in diabetes.

From the start Google was in the catbirds seat when it came to this partnership. They knew all three of the insulin companies were anxious to work with them and settled on Sanofi not for any other reason than they were willing to write the biggest check. Based on the way things are moving it looks like Sanofi will write an even bigger check which Google will be happy to cash.